Paying for Prius with a credit card

If you have GAP on your car loan, and you are upside down or near upside down, don't pay off the car loan. YOU MIGHT NEED THAT GAP!

I did in fact pay off my Saturn loan for a fantastic rate on my Capital One card. As was said, it was a 0% fee transfer at 4.9%. I even paid ahead of my original schedule. So it can be done, but as stated, check if there are transfer fees. My AAA card offered better promotional interest to use their checks, but there was a fee to use the checks. No way jose.
But, with 2 years left till the Saturn balance would be paid off, the car is totalled, and the insurance paid $2K less than I thought the car was worth, and left on the card.
So I am STILL virtually paying off the Saturn, though I have a great new car.

By the way, about the statement that a credit card company cannot be a lienholder. They wouldn't be a lienholder, they aren't assuming collateral. Credit cards are usually unsecured loans. If you can pay for the car in full that way, you get your title, as I did when I paid my Saturn loan by credit card check.

 

IIRC, the 0% only lasts something like six months, which necessitates doing a balance transfer every six months (actually slightly less) to another card with 0% balance transfer. If you don't forget, you'll save the $4000. If you do forget, you could end up owing more in interest.

 

Hm.., if you were paying the minimum $375.66 per month on that 5.49% loan, it would cost you $4053.80 in interest. @ 0%, you would only have to pay ~$323.94 min per month.

That 0% is a great deal as long as you can keep finding a card to jump to. Cool, thanks for the info!

 

I'm just fleshing out all the worst case scenarios, so hopefully someone knows the answer to this somewhat complicated-to-describe scenario...

Is it possible for the large debt on your credit card due to the 0% balance transfer of a car loan to drop your credit score enough to such that you can't get another 0% balance transfer offer?

Also, how do you get your car loan onto your credit card? For example, my lender only accepts checks. While I think I could use those checks that the credit card company mails me, I think those are considered cash advance, i.e. APR applies immediately instead of the one-month grace period like normal credit card transactions. I think I've heard of something about doing balance transfer with those checks, but I think there are some hidden fees or something. Can anyone enlighten me?

 

I did a balance transfer to Capital One with the checks. Some cards will let you use the checks as a balance transfer, others you have to fill out the form. Just put in the name of the lending instution, account #, and transfer balance amount.
You'd have to read the terms of the transfer and the terms of the special rate for the method of the transfer.
As for transferring from card to card, be careful. Some cards charge a fee for balance transfers, even with the promotional rate. AAA's credit card is like that. Great low rate for 6 months, but has a 3% transfer fee.
Also, if you already have the card(s), then there shouldn't be a problem bouncing your balance from card to card, as long as there's enough time between transfers. But if you open new cards, that could negatively impact your score.
Now that I think of it, even transferring between existing cards might cause a negative impact, as that could appear as if you are trying to prevent from having to make any payments or frequently skipping payments.

If you pay off a car loan with a credit card, you are going from a loan secured by your car for collateral, to an unsecured credit card loan (since most CCs are unsecured loans). So yes, you get your title back indicating it is paid in full.

 

My dealer let me put 5k on discover. i paid it off as soon as it posted.

 

I work for a credit card processing company, but I'm on the acquiring side, not on the issuing side. That means my company helps merchants accept payment by Visa/Mastercard, and we bill merchants the discount rate they pay, but I don't know anything about credit reports or rewards points or monthly payments or anything like that.

Two things come to mind here:

First, Visa and Mastercard both require that any business which accepts their cards have a *contract* with some acquiring bank (like the company I work for). That contract must bind them to certain terms & conditions for card acceptance. One of those conditions is an "Honor All Cards" policy. Different card types are covered by different interchange programs, for example, so someone with a certain kind of no-limit Visa card might cause a merchant to pay over 3% for a sale, when a consumer check card would have cost only 1.5%. (My percentage figures are inaccurate -- examples only.) This condition requires that a merchant *not* turn a customer away with one kind of V/MC card, while accepting another kind of card.

I'm not sure, but I think any sum of money a car dealership will accept cash for, they should also be willing to accept a credit card for.

A test case for this condition would look something like this: a customer arranges to buy a car from a dealership. The customer asks the dealership if they can pay the entire balance of their vehicle in cash, and the dealership says yes. (Is this true? Will cash work?) The customer then says they want to pay the entire balance with their Visa card. The merchant refuses, or only allows the customer to pay a certain amount of the balance with their card.

The customer could then talk to the bank who issued their card, report a "compliance violation", and the merchant could see sanctions, possibly including fines or the loss of their ability to accept Visa/Mastercard cards, but most likely just an angry call from someone who works for their merchant processor.

Second, there do exist Visa/Mastercard interchange programs for large sales. These programs might require that the card be a Visa Corporate or Business or whatever card, and might require that the merchant provide "level 3 purchasing card detail" along with the sale details. (So the merchant's card processing system would need to be smart enough to know to ask for the sales tax, customer code, invoice number, and line-item-detail.) But the merchant would qualify for an interchange program that charges a flat $50 per transaction. I have personally talked to a paper mill which had a customer who was buying a large shipment of paper using a Visa Corporate card. The sale amount was in the tens of thousands of dollars, and the merchant needed to confirm their processing system was passing all the information needed to qualify for that $50/transaction rate. If they didn't confirm this, they would risk sending the item through and finding out after the fact that Visa was qualifying the transaction for 2.5% of the sale amount, or something.

Not sure if anyone feels like asking their bank about making themselves into a test case for that Honor All Cards policy, but it might be interesting.

 

I only keep two credit cards, so I maxed both of them out. On one, I have a points reward system, the other is cash back, so I get a nice deal with both. I guess now I can finally redeem enough points for a lobster dinner instead of Blockbuster points! I would be wary of some of those checks that credit cards send, some companies treat them like a cash advance, which usually has a fee or higher interest rate.

I had heard, and I don't know if this is true, that if you pay more than 10k in cash, they have to report you to some gubment agency. But again, no idea if that is a conspiracy theory or if is true. I seem to have misplaced my tinfoil hat.

Sadie

 

A friend's mother is a stickler for getting the best value for her money. She recently purchased two cars: one new (credit card) and one used (cash).

She negotiated her best deals and offered cash for the used vehicle. When the dealer agreed - she produced the cash in one dollar bills! Having made her point negotiations then moved onto the new car credit card purchase.

What made the credit card purchase different is that she made an advance payment to her credit card (in the full amount of the cost of the new vehicle). When the dealer checked on her "credit limit" there was no problem. The dealer found her whole approach unusual, but credible.

The purchaser left having obtained the best price on two vehicles.

 

When I was purchase my prius I wanted to put a $1000 deposit down on my credit card and would not accept it so, I give a check instead. But I thought that it was strange that I could not put it on the credit card.

 

They probably did not want to take the 3% hit that charging to a credit card would incur for them. The $50/transaction would be even worse at 5%.

 

Visa/Mastercard regulations would then apply to the sale. The customer would have chargeback rights in addition to their existing rights under commerce law. There are many different dispute types available, including "not as advertised", "defective merchandise", but most of those dispute types are only available up to 6 months after the date of the sale.

Or the buyer could take a gamble: wait 4 or 5 months and send a sales draft request (just asking the merchant formally using Visa/Mastercard channels for a copy of the sales draft). If the merchant doesn't respond to the request with a readable sales draft within 30 days, the customer's card-issuing bank would be allowed to charge the entire amount of the sale back from the merchant, with no Visa/Mastercard recourse. (Reason code would be something like 'unfulfilled retrieval request'.)

 

A word of caution.

"Revolving Credit". Your credit rating is going to get slammed by loading this amount on your card. If your card has a revolving balance (outstanding balance) of 30% or more of your credit limit for that card, your credit score will take a big hit.

So what you may ask? Wait until you get your insurance renewal for your house and car. It is based on your credit score. Thinking about refinancing your house afer doing this? Forget it.

Please be careful here. Protect your credit score and if you do not believe me, spend the $15 at Equifax and get your FICO Score.

I do the Alaskaair miles card thing and I could pay off my car now with it. But my insurance will go up on my house and car. It is simply not worth it.

Ironically, having that car loan makes you credit worthy and will have a positive impact on your insurance.

 

(Edit after the fact: I didn't read the message about a sale being $1000 above, so my statement below wasn't well-informed.)

I don't think you understand -- the $50 large-ticket processing fee is INSTEAD OF any discount rate.

The merchant still has to jump through significant technical hoops first, to be capable of processing a sale with that rate. If they didn't do that first, they would default to whatever discount rate they usually get.

 

mspencer, I'm not certain who you are saying doesn't understand, but since I'm the only other person who has mentioned $50, I'll assume you are referring to me.

I understand that the $50 is a flat rate per large transaction if the dealer goes through various hoops that you have described. For $1000 which is the case that LoreePrius described, $50 works out to be an effective rate of 5%, compared to the normal 3% that is I believe is paid by the merchant for credit card transactions.